SEC to review rules for proxy process at public forum

On behalf of Law Office of Clifford J. Hunt, P.A. on Saturday, November 17, 2018.

The Security and Exchange Commission frequently handles issues that stir up controversy between investors and companies. Of these issues, one of the most contentious is corporate democracy. Later this month, the SEC will hold a roundtable to review its regulations regarding corporate democracy and the “proxy process.”

The meeting, which will be open to the public, could prove controversial. This meetingmay prompt clashes between companies and shareholders regarding proxy voting influence.

What will happen at the meeting?

The SEC regularly reviews its existing rules to ensure that current regulations achieve their objectives and adapt to changes in the marketplace. Reportedly, the SEC will accept written comments at its upcoming public forum, and may consider rule-changes that attendees propose.

Recently, some corporations have called on the SEC to raise the bar for proxies to submit proposals. The proxy process will be a hot-button issue for many SEC members and attendees. The proxy process allows shareholders such as big pension funds to pressure companies to vote on various matters, including politically charged issues like climate change and gun control.

The implications for businesses

Since the financial crisis that took place nearly a decade ago, many American corporations have expressed to the SEC that the current voting rules allow special interests and proxies to have unfair leverage. Shareholders’ proposals have become crucial in recent years as a means of corporate oversight.

Shareholders hope to protect the regulatory strides that they have made. Businesses, however, are preparing strong offensives to do away with previous regulations and reinstate rules that benefit corporate interests.

This meeting could indicate whether investors will retain their footholds, or whether the SEC will capitulate to corporate interests now that the business-friendly Trump administration is in power. If the SEC seems open to decreasing investors’ voting influence, then businesses could expect favorable regulations in the near future.

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